Information correct at the time of publication - Offers, products and services may no longer be available.
An ISA, or Individual Savings Account, is a tax wrapper which means that no tax is payable on the interest earned. Evolving from the PEP's and TESSA’s of the 80's and 90’s, ISA's are intended to encourage a wide range of people to save long-term.
There are two main types of ISA: a Cash ISA and a Stocks & Shares ISA. A Cash ISA can offer a fixed or variable interest rate and can be an easy access or notice account. As the value of a Cash ISA cannot fall (although the interest rate may fluctuate), the Cash ISA is well-suited to the cautious investor.
A Stocks and Shares ISA could provide a better return, but as with all equities-based investments, is subject to market volatility.
Most banks and building societies offer ISA accounts, so it's worth shopping around for a good rate. Some fixed rate Cash ISA's will only accept a single, lump-sum deposit but most easy access and notice accounts will allow deposits at any time and you can open some ISA's with as little as £10.
Many Stocks and Shares ISA's offer regular savings plans so you can invest on a monthly basis.
The important points to remember are that you can only open one new Cash ISA and one new Stocks and Shares ISA in any tax year and there is a limit on the amount you are able to save in each tax year (see below).
Should you find that the interest rate on an existing Cash ISA is no longer competitive, you are able to transfer to a different provider without losing the tax-free status. Make sure you inform your current provider that you're transferring and not closing the account, though, and not all Cash ISA's accept transfers so bear this in mind when comparing rates.
From 5th October, new ISA limits will come into force for the over-50's (you need to have a date of birth on or before 5th April 1960 to qualify). Eligible individuals will be able to save up to £5100 in a Cash ISA and the remainder of your allowance, up to the new overall limit of £10,200, can be placed in a Stocks and Shares ISA. Alternatively, you can use your whole allowance for a Stocks and Shares ISA only. These new limits will be available to everyone aged 16 or over from April 2010.
Teachers Building Society has recently launched a Cash ISA Bonus, paying 3.00% gross/AER (includes a 1.25% bonus until 5 April 2010). Teachers benefit from a lower minimum investment of £100.
To find out more and to download an application form visitBookmark With:
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